UK's Hammond says Britain needs new economic plan after Brexit vote

By William James| BIRMINGHAM, England

BIRMINGHAM, England Oct 3 Britain needs a new
plan to balance the competing demands of fixing its still-weak
public finances and boosting the economy with infrastructure
spending following the vote to leave the European Union, finance
minister Philip Hammond is expected to say on Monday.

Although Britain's economy appears to have largely weathered
the initial shock of June's vote, Hammond plans to ease the
strict spending rules laid down by his predecessor George
Osborne.

Speaking at the ruling Conservative Party's annual
conference in Birmingham, Hammond is due to say that whilst
budgetary discipline remains crucial for the country, there is
also a need to invest in building a fairer economy.

"The British people elected us on a promise to restore
fiscal discipline, and that is exactly what we are going to do,"
he will say according to extracts from the text of his speech
provided by his office.

"But we will do it in a pragmatic way that reflects the new
circumstances we face."

Hammond will reiterate his decision to push back the
government's target to turn its 4 percent 2015/16 budget deficit
- among the biggest of the world's rich economies - into a
surplus by 2020. He has yet to set a new target date.

Last week, official data showed Britain's giant services
sector grew strongly in July, giving the clearest sign to date
that the economy has not suffered a major slowdown after the EU
referendum.

Hammond will also promise to deliver a "clear, credible
fiscal framework" to reassure investors that he will continue to
bring down the deficit by controlling day-to-day public spending
while also focusing on investment needed for long-term growth.

He has previously played down expectations of a surge in
public spending to offset any economic hit from the Brexit vote,
but said he could fund modest infrastructure projects if needed.

In the first sign of how he intends to use his new-found
fiscal flexibility, he will set out on Monday a new 2
billion-pound ($2.58 billion) borrowing plan to help address a
long-term housing shortage.

Hammond's full fiscal plan is due to delivered on Nov.23.

"I will set out our plan to deliver long-term fiscal
sustainability while responding to the consequences of
uncertainty in the short term and recognising the need for
investment to build an economy that works for everyone," Hammond
will say.

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